They’ve been around for several years, but can blockchain and NFTs still revolutionize the wine industry? The database will investigate.
Almost five years ago, DB’s Arabella Mileham was inspired by the ‘No. He reported on the 4th Industrial Revolution. .
Holmes discussed how technology can transform the wine trade, reduce trade tensions, provide more information to consumers and enable a seamless supply chain.
But did that dream become a reality? If not, why not?
blockchain
First, and most obviously, the wind has taken the wind out of sales on NFT marketplaces around the world. The industry was worth around £31bn in 2021, but is now worth around £7bn-10bn. Some predict that only about 5% of NFTs retain their value.
However, there was a clear “bubble” and there were only a limited number of copies of the Bored Ape Yacht Club model that consumers were willing to purchase. And importantly, these were just digital assets.
However, we are obviously talking about a concrete, real product here: wine. Of course, you may eventually be able to drink it. In this example, as with many other luxury goods such as fashion, blockchain and NFTs still have great potential.
platform
These issues were discussed in a recent podcast with Scott Melker, host of The Wolf of All Street, and dVIN, a blockchain-powered b2b platform for fine wine trading. This was discussed in a conversation with David Garrett, an Argentine winemaker.
This conversation, while not surprising to those on the technical side of wine trading, was informative about the issues and how they need to be solved for blockchain and NFTs to be successful.
Garrett emphasized that wine is “one of the most highly regulated products in the world,” but noted that some players, such as Berry Bros. & Rudd, “receive wine directly from the winemaker, The documents show that the documents are being stored for customers and traded between customers. .
His approach is to use blockchain. dVin tokenizes bottles and tracks the movement of wine around the world. Such an end-to-end solution could inevitably change the dynamics of centuries-old trade worth almost £100bn, and there are clear reasons for doing so.
practical meaning
As Garrett points out, 1 in 10 fine wine bottles spoils, so this has serious practical implications for all producers and retailers. So, through blockchain, this intimate, digitally constantly tracked wine data has the potential to solve a £10bn a year problem across transactions.
Creating a universal protocol to put wine on the blockchain will provide “uniform liquidity” to a previously decentralized luxury asset class. That’s because, at the time of writing, the global wine trade worth around £600bn a year is high-end investment grade, collectible and rare. wine.
Additionally, if fully adopted, it could completely disrupt the counterfeit wine trade by showing consumers via blockchain that the wine came directly from the producer’s barrels.
Will producers take notice?
Evidence is scant so far. While other luxury goods and assets have already moved into the NFT and digital asset space, wine trading has been slower to take off. There are also outliers like Chilean producer VIK. After releasing its most iconic wine VIK at Place Bordeaux last year, Viña VIK has released a limited edition of 50 double magnums of the 2018 vintage as NFTs.
Perhaps the most striking example of the potential use of NFTs, Bordeaux real estate company Château Malartic-Lagravière told db last year that it had 150 NFTs linked to engraved and numbered magnums of the 2022 vintage. He told DB how the entire thing was bought within an hour of its launch. .
There are also several examples of the Web3 platform moving into this space, offering bottles of Bordeaux en primeur as NFTs. Then there’s BlockBar, founded in 2021 by cousins Sam and Dov Farrick, who told db that NFTs are a “simpler, easier way to do business.”
accountability
Sam Farrick said its genius lies in its simplicity: “Very simply, anyone, anywhere can go online and see who owns what. “It gives more accountability to those who own the assets.”
However, despite the obvious benefits for trade, large-scale adoption has not been seen so far. Even many years after this technology became available, such instances remain rare, and field adoption of the use of such technology remains weak.
One producer who spoke to db recently made a simple but powerful point: “We don’t really know what it is.”
incentive
So how can we change the minds of traditional industries that are less digitally native than consumers and perhaps fearful of the impact of such technology?
Garrett’s solution, apart from the obvious security of logistics and movement of goods provided by blockchain, offers an incentive for adoption and shows producers how it can be an effective money-maker. It is also shown in
Garrett’s token, called Vincoin, provides rewards and status from winemakers when customers open a bottle of wine. You can then use these incentives to pay for additional bottles of wine or purchase wine experiences, similar to popular consumer products such as air miles.
Such NFT products not only provide security for producers, but also offer a clear potential for increased profits to a new audience of digital asset owners.
data
Another important legacy issue in the wine trade is data. Information about marketing, consumers and fundamentally how they behave lags far behind other luxury products. Here, Garrett says bluntly, “They have no idea who’s drinking their wine.”
Through the use of digital technology, multi-million pound wine producers will know for the first time exactly who will buy their product, what will happen to their wine on the secondary market and ultimately who will drink it. You will be able to do this. This is all commonplace in many other fields, but for wine this is revolutionary.
This allows producers to see potential growth areas, trade and external impacts, and consumer demographics for specific types and types of bottles.
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